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News: House prices continued to rise in March

House prices increased by 0.9% in March and by 1.6% in the first quarter of 2006, said the Halifax today. The rise in prices was smaller than the 2.3% gain in 2005 Quarter 4.

The annual rate of house price inflation, at 6.2%, shows a strengthening in price growth compared with the trough of 3% in 2005 Quarter 3, but is still significantly lower than a year ago (9.7% in 2005 Q1).

However, there are signs the property market may be beginning to level off, the lender said.

All houses, all buyers index (1983=100)

Index (seasonally adjusted)

567.1

Monthly change

0.9%

Annual change

6.2%

Standardised average price (seasonally adjusted)

£175,215

The biggest house price rises in the first quarter of 2006 were in Wales (4.5%), East Anglia (3.4%) and East Midlands (3.0%). The average price in both East Midlands (£153,592) and Wales (£150,527) passed the £150,000 landmark for the first time in Quarter 1.

The average price is now below £150,000 in only four regions: North, Yorkshire & the Humber, North West and Scotland.

Annual house price inflation in 2006 Quarter 1 was in single digits in all the regions of Britain. The biggest gains in house prices over the past year have been in the North West (9.4%), Yorkshire and the Humber (9.3%) and Wales (8.8%). The smallest increases have been in the South West (1.7%), South East (2.1%) and East Midlands (3.7%).

The annual rate of house price inflation has slowed in all the regions of Britain over the past 12 months with the exception of Greater London where the increase in the past year (7.2%) outstrips the gain in the preceding 12 months (1.1%).

The ratio of property prices in the north to those in the south has narrowed to its smallest for eight and a half years. In monetary terms, the differential between the average price in the south and its equivalent in the north has fallen by £12,350 over the past two years with prices in the south £79,400 higher than in the north in 2006 Quarter 1. This is £19,600 lower than in early 2003 when the north/south differential stood at a record £99,000.

Housing demand remains well underpinned by a strengthening economy, high employment and low interest rates, said the bank. Labour market weakening, the continuing high level of house prices in relation to earnings and pressure on householders' finances from the recent hikes in utility and council tax bills are, however, expected to curb demand. UK house prices are forecast to rise by 3% in 2006, broadly in line with the predicted rise in retail price inflation.

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